Sega Amusement Machine Research and Development Department #2, (Sega AM R&D Dept. #2, Sega AM2) is a division within Sega of Japan. It was formed in 1990 primarily to create arcade (or "amusement") games.

AM2 is arguably the most successful R&D division to have existed within Sega during the 90's, to the point where its internal division name became a marketable brand in its own right. As such, while significant changes have occurred within its lifespan from a business perspective, this division of Sega has always referred to itself as "AM2", even if it has not been exclusively an amusement-only department since 1991. During the 1990s and early 2000s, the chief operating officer of AM2 was industry stalwart Yu Suzuki.

Trough all Sega development divisions, Sega AM2 has remained most consistent in it's naming due to the "Number 2" attached. Thus there no multiple pages on Sega Retro unlike other Sega development teams.

Corporate history

Sega AM2 is thought to have been a continuation of an older R&D studio , famed for arcade games featuring sprite-scaling graphics and moving cabinets with games such as Hang-On, Space Harrier, OutRun and After Burner. It became a pioneer of early 3D polygonal 3D graphics with the 1992 release of Virtua Racing, before creating Virtua Fighter, beginning one of Japan's most popular arcade series ever made. Virtua Fighter was, incidentally, the first time AM2's name (and signature palm tree logo) became publically visible - a trend that would continue in the majority of its releases going forward.

As with other R&D divisions within Sega, Sega AM2 was briefly renamed Sega Software R&D Dept. #2 in May 1999. Unlike its sister divisions, however, the department continued to trade as AM2 and was largely unaffected by the internal restructure. In 2000 the division went one step further, becoming an entirely separate (but wholly owned) subsidiary of Sega officially known as Sega-AM2 Co., Ltd. AM2 was at this point the only R&D division to still rely on the "AM" name.

Isao Okawa's CSK was the parent company of Sega at the time, with its own software development division, CRI. CRI absorbed Sega AM2 in February 2000 (occasionally leading to credits to AM2 of CRI) and renamed itself Sega-AM2 Co., Ltd. in August 2001[1]Media:Dorimaga_JP_20010824_2001-07.pdf[2]. Confusingly, CRI Middleware Co. Ltd. was then established to handle the sale of CRI's former products such as ADX and Sofdec.

Yu Suzuki left AM2 in 2003 to found DigitalRex, also owned by Sega. This would become AM Plus before any games were released.

Sega's separate development companies were merged back into the main business in 2004, and this included AM2, trading once again as "AM R&D Dept. 2". Due to the closure of AM3 in May 2008, some members moved to AM2. In May 2010, the arcade departments lost their "AM" name, becoming R&D2. During the March 2015 restructure, Sega' arcade division became Sega Interactive, thus becoming R&D2 of Sega Interactive rather than Sega proper.